Greek Unrest, Economic Gloom Thrash Stocks
FOX Business: The Power to Prosper
Concerns over the volatile situation in Greece, coupled with another round of dismal economic data, sent the major market averages tumbling to the lowest level since March.
Today's Markets
The Dow Jones Industrial Average tumbled 178.8 points, or 1.5%, to 11,897, the S&P 500 slid 22.4 points, or 1.7%, to 1,265 and the Nasdaq Composite dipped 47.3 points, or 1.8%, to 2,631. The FOX 50 dropped 14.3 points to 889.
The markets have made a significant reversal since rallying on Tuesday. Indeed, in a sign of the unrest on Wall Street, the VIX, a gauge of volatility, soared 17% to the highest level since late March.
The situation in Greece remained dicey Wednesday. The country is struggling with a nearly half a trillion dollar debt load, and is working to avoid having to restructure, or worse, default on its debt. However, the Greek public has protested deep austerity measures to cut back on spending, and plans to privatize government-held entities have fallen far short of the necessary capital requirements.
Other euro zone nations have been slow to agree to further bailouts to assist the embattled nation, leaving the road to finding a resolution fairly murky. Adding to the tumult, Greek Prime Minister George Papandreou said he would form a new government on Thursday.
Concerns about the Greek situation pushed the euro down by 1.8% against the dollar, the biggest decline on a percentage basis in nearly a year. The greenback soared 1.6% against a basket of world currencies.
Manufacturing activity in the New York region fell sharply in early June, pointing to the first contraction since November 2010. The New York Federal Reserve's manufacturing survey slid to -7.8 from 11.88 the prior month, considerably weaker than the 11.88 analysts had anticipated. A Reading less than 0 point to contraction in manufacturing, while reading above 0 indicates expansion.
Businesses polled by the New York Fed also noted new orders and shipments decreased considerably during the month and had, on the whole, reduced hiring expectations.
The Empire State Survey is one in a series of monthly manufacturing surveys by regional Federal Reserve banks. Analysts have been concerned that the supply-chain impact from the earthquake that hit Japan, coupled with high energy prices, could have caused a more broad-based slowdown.
Consumer prices ticked higher by 0.2% in May, according to the Labor Department, which was slightly higher than analysts had expected. Excluding food and energy prices, the gauge of inflation on the consumer level was up 0.3%, the biggest increase since July 2008.
Soaring energy prices had pushed the measure of inflation at the consumer level up in previous readings, but moderated to some extent in May. In fact, the energy component actually dropped 1.1% on the month. New and used automobiles and apparel made the most significant gains, both increasing by more than 1%.
Market participants have been looking to see if the increases in energy prices made their way into the broader price level.
Energy commodities plunged amid concerns a slowing pace of economic recovery would crimp worldwide demand.
Light, sweet crude plummeted $4.56, or 4.6%, to $94.81 a barrel. Crude prices have now retreated to the lowest level since late February. Wholesale RBOB gasoline was off 14 cents, or 4.6%, to $2.92 a gallon.
Consumer gasoline prices continued moving lower. A gallon of regular gas at the pump cost $3.69 on average nationwide, down from $3.96 last month, but well above the $2.70 drivers paid last year, according to the AAA Fuel Gauge Report.
In metals, gold edged higher by $1.80, or 0.12%, to $1,526 a troy ounce. Silver fell ended unchanged at $35.41 a troy ounce.
Corporate News
Pandora Media (NYSE:P) climbing more than 10% on its first day of trading on the New York Stock Exchange, following in the path of other recent successful technology initial public offerings, like LinkedIn (NYSE:LNKD).
Dish Networks (NYSE:DISH) bid nearly $1.4 billion in cash to acquire TerreStar Networks' assets through a bankruptcy auction.
Foreign Markets
The English FTSE 100 was down 1% to 5,743, the French CAC 40 dropped 1.5% to 3,807 and the German DAX fell 1.3% to 7,115.
In Asia, the Japanese Nikkei 225 climbed 0.28% to 9,574 and the Chinese Hang Seng dipped 0.68% to 22,344.